Lehman Brothers seeks to question 'London Whale'

Lehman Brothers Holdings Inc is seeking court permission to question the JPMorgan Chase & Co trader known as the “London Whale” in connection with its $8.6 billion (£5.5 billion) lawsuit accusing the largest US bank of driving it into bankruptcy.

In a late Wednesday night filing in Manhattan bankruptcy court, Lehman and a committee of its unsecured creditors said months of disclosures about the trader, Bruno Iksil, suggest that he played a “greater role” than previously thought in the events underlying the May 2010 lawsuit. They asked US Bankruptcy Judge James Peck for permission to ask French authorities to compel Iksil's testimony. JPMorgan spokesman Joseph Evangelisti declined to comment about the request. A lawyer for Iksil did not immediately return a call seeking comment. Iksil worked for JPMorgan in London and is no longer employed by the New York-based bank. His activities have been linked to more than $6.2 billion of trading losses at JPMorgan's chief investment office.

In the court filing, Lehman and its creditors committee said Iksil's “practice of intentional mismarking” of trades warranted an inquiry into trades he oversaw that led to an “unjustified multimillion-dollar collateral call” on September 9, 2008, six days before Lehman filed for bankruptcy protection.

Lehman and the committee also want to examine how the chief investment office managed JPMorgan's exposure to Lehman.

But they said Iksil's lawyers have indicated that he will not cooperate in the absence of an official request under international legal norms, even though JPMorgan has largely agreed to the discovery requests.

Lehman accused JPMorgan in the lawsuit of hastening its bankruptcy by using its “unparalleled” knowledge of its distress, through its role as the main clearing bank handling third-party dealings, to extract $8.6 billion of collateral in the four business days prior to the Chapter 11 filing.

Last April, Peck narrowed Lehman's lawsuit but let stand some claims, saying that protections given to “systemically important” banks such as JPMorgan did not excuse them from acting in a “commercially unreasonable” manner.

Lehman was once Wall Street's fourth-largest investment bank, and its bankruptcy remains the largest in U.S. history.

It emerged from Chapter 11 last March, and is expected to spend several years winding down. Lehman has said it hopes to repay creditors about $65 billion.